We asked seasoned investors from Harris | Oakmark, Loomis Sayles, WCM and Mirova how they deal with the constant menace of market volatility.

Equity markets in 2025 have been, to say the least, noisy. Geopolitical concerns, tariff worries and surprisingly robust earnings gave many investors cause to cheer and despair in equal measure.

The volatility is perhaps best exemplified by the moves in US markets. As Harris | Oakmark’s Bill Nygren pointed out in a recent note in the first half of 2025 the S&P 500 experienced its shortest bear market ever, as well as its fastest recovery to a new high: “U.S. equities went from peak to peak in just 57 trading days, compared to a median of almost two years for the 12 bear markets since 1945.”¹

When markets feel so unpredictable, it can be easy to get overwhelmed by the data. Words like ‘unprecedented’ resound like mantras and market commentators become ever more incredulous.

Such moments are fraught with danger, but for investors that stay the course, they can also offer up significant opportunity. And then when markets become calmer it’s easy to become complacent, but the next bout of market disruption is usually not far away.

What can active managers do?

WCM Select Global Growth manager Sanjay Ayer explains that when markets are so hot, it is important to keep a cool head. He said: “Over the past several quarters, we’ve stressed the importance of temperament and balance, especially during periods of heightened uncertainty. We believe Q2 serves as an apposite lesson as to why this is the case.

“Markets experienced pronounced selling pressure in April due to policy uncertainties, resulting in double-digit declines that subsequently reversed into double-digit gains. Capitulation trades quickly shifted into those driven by fear of missing out.”

A key part of WCM’s strategy for weathering volatility is deliberate portfolio construction that puts a premium on diversification and balances exposures across defensive, secular, and cyclical positions. This is especially important at the moment, according to Sanjay, because the future remains clear as mud with respect to exogenous risks.

“We remain clear-eyed that concerns prompting April’s sell-off are ever present; policy and posturing could very well morph into less bark and more bite, yielding pernicious outcomes for global markets,” he said.

However, Sanjay cautioned against doing anything rash. He said: “April’s drawdown marked just one-of-many recent memory instances where investors forewent temperament and balance, eschewed company fundamentals, and ditched the baby with the bathwater. And there will undoubtedly be more episodes like it.

“For us, however, we maintain our belief that businesses with growing competitive advantages, aligned corporate cultures, and supportive tailwinds will continue to deliver, despite the bumps along the way.”

As a value manager, Harris | Oakmark is used to going against the grain of market sentiment. Bill explained: “Many investors prefer to stand on the sidelines during market chaos because they don’t have enough conviction to warrant making trades. We’ve found that early in bear markets, stock prices are not usually driven by individual company valuations, but rather on quickly reducing portfolio risk.

“This reaction creates a good pond for us to fish in. As a result, we are usually much more active during early bear markets since we believe unusually wide valuation spreads more than compensate for the increased uncertainty. History suggests that some of our most value-added work has occurred during these stressful periods.”

Beware the overreaction

The speed at which markets recovered did however come as a surprise, even for seasoned professionals. In the two weeks following ‘Liberation Day’, the team at Harris | Oakmark were about five times more active than usual.

“In hindsight, had we known the bear market was over, we’d have moved faster,” said Bill. “Though we aren’t market timers at Harris | Oakmark, we are fans of periodic portfolio rebalancing. We think it makes sense to set target portfolio weightings for stocks, bonds and cash, and within the stock portion, to further target regional exposures.

For Bill, especially after large market moves, it’s possible to take advantage of volatility by trimming the outperforming categories and adding to the underperforming ones. “This can help prevent an ever-increasing exposure to one asset as its price gets more and more expensive,” he continued.

“Further, it establishes the pattern that you can take advantage of inevitable periods of weakness to increase your holdings in undervalued assets. This behaviour goes a long way toward reducing, if not eliminating, the counterproductive temptation to sell after declines.

Keeping eyes on the long-term prize is another strategy that can help to tune out much of the market noise. Seeing the world through a long-term thematic lens is how the managers of the Mirova Global Sustainable Equity fund maintain focus amid bouts of volatility, such as those we’ve experienced in 2025.

“The way that we invest is based on the idea that the world is slowly changing,” said portfolio manager Jens Peers. “We have very strong transitions between how we live today and how we will live in ten years’ time, and this continues to be true. These are secular demographic, environmental, technological and cultural or governance transitions, many of which persist regardless of what any election brings in any part of the world and regardless of economic cycles.

“As long-term investors, it's extremely important for us to maintain that long-term thinking and to translate that into ideas in the portfolio, taking into account current valuations… [however] to manage through this shifting context, it is important to not only focus on how the world is changing, but to also manage risk relative to the benchmark and the market environment.”

Thinking longer term is also essential to how Loomis Sayles’ Growth Equity Strategies Team view the investment landscape. As portfolio manager Aziz Hamzaogullari pointed out, while market volatility has eased for now, it is important to remember that the future is always uncertain.

He said: “In the past 150 years there have been 23 market corrections of 15% or more, from 1871 to 2022. So, every six and a half years you have a major market event. If you go back and look at newspapers and magazines the day before these major events happened to see what people were saying, you are going to see that in most cases people were blindsided.

“The market often thinks in terms of ‘risk on’ or ‘risk off’. We say it’s risk on because we don’t see any risks on the horizon without realising that, in the majority of cases, you are not going to see the risk until it actually happens and only then does it become easy to identify. As investors, I believe we have to embrace that uncertainty and take advantage of it.”

Put another way, there’s always risk, always uncertainty. Sometimes it’s well articulated, sometimes not.

As Aziz concluded: “There is a risk always around the corner that no one is talking about and by the time people are talking about it, it is usually too late.”

Written in August 2025